Tuesday, November 9, 2010

Right and wrong

The following is from an email exchange between Robert and I regarding this article:

She's right to promote individual identity over stereotypes (whether or not the stereotypes apply statistically - individuals deserve to be treated as such). 

Her primary failure is in the assumption that women are not or have not been drivers of the culture to the same extent that men have. She assumes that men have been giving it to women and women have been taking it since...well forever. The truth is that women are powerful shapers of culture, much more so than the feminist movement has ever acknowledged. Only in severely dysfunctional societies (and I mean societies that quickly disintegrate because they are genuinely not functional) have women altogether been subjugated in the way that the feminist movement has described. In all societies that function, and persist, women inevitably wield powerful influence. And they do so for the obvious reasons that they compose half the population and have a monopoly on certain highly prized abilities - that is, they have something valuable that the other half of the population wants badly.

I'm not an expert, but I think that you will find that even in cultures that are outwardly repressive of women it won't take more than an up close glance to see how women are exercising influence throughout the society.

The other side to the coin is that women are clever about their own interests. Clever enough to fool men and even to fool Gloria Steinem. Consequently, a great many repressive practices against women are actually enforced BY women. Look at genital mutilation in sub-Saharan Africa. I hear that this practice is perpetuated by mothers and grandmothers, not by men at all. Why is this the case? Well, it's obvious really. And it's the same for practices that are aimed at repressing men and are enforced by men (e.g. rules about when a man is allowed to marry). These practices safeguard the interests of those who enforce them. So, it's not MEN repressing WOMEN. Instead it's one group of people (say, matriarchs) repressing another, competing group (say, young women who are approaching sexual maturity).

So, to sum up: Gloria Steinem should take her own advice about lumping people into static groups. There are many kinds of men and many kinds of women in the world. They should be protected as individuals, with individual protections that don't vary according to what groups we might wish to lump them into. From that perspective feminism IS (or ought to be) dead, because it doesn't - can't - give protection to individuals when it assumes that men repress and women submit.

Wednesday, September 1, 2010

More on Saving and Investment

This article is a much better exposition of some of the ideas I was trying to get at in my post titled Bad Investment.

Here's a related post by Eric Falkenstein that discusses how people and businesses behave when their performance on fundamental measures is not well correlated to their earnings.


From the point of view of society, technology is the reason for doing science.

Tuesday, August 31, 2010

Bad Investment

I kind of understand the reasons behind the dot-com bubble. The emergence of new, paradigm-shifting technology suggested that untold fortunes might be made by the fearless who got in on the ground floor. The real estate bubble is more mysterious.

Who really thought that housing prices were accurately reflecting a balance between the number of available units (supply) and the ability of consumers to pay (demand), circa January 2006? Or even a year earlier, for that matter. Even casual attention to the loan-making process during this time would suggest a problem with the direction of the investments that were being made. Hindsight is 20/20, but at the time I did decline to take on such a loan myself because it just all seemed so ridiculous (though I should have taken it, had I been a more rational actor). 

I'm clearly no economist, but I think that the bubbles during the last halves of the last two decades must have a common cause. In both cases enormous investment was made on a basis of careless speculation bordering on willful self-injury. Why?

Some people talk about interest rates being artificially low and blame Greenspan and Bernanke. I'm no expert on that one, but I do wonder whether interest rates were low only because of the actions of the Fed. My suspicion is that low interest rates alone didn't cause all that bad investment, but that both the low interest rates and the bad investment were caused by a third factor.

I'm not quite sure how to phrase it, but doesn't it seem like there was an awful lot of capital that needed someplace to go during both of these booms? I've heard the phrase global savings glut bandied about, but I'm not sure exactly how to evaluate that. One thing seems sure: typical due diligence prior to investing was not being practiced in 1996 or in 2006. Is it simply that there were not enough quality investment opportunities available during these periods? Too much money chasing too few opportunities? That story seems to fit the facts, but I can't quite make sense of it.

Under what circumstance is there too much money ready to be invested? It's not the kind of thing I've heard debated, but I can imagine a world where saving is happening at a higher rate than is consumption. In that world, each saved dollar 'wishes' to be put to use producing, but most production is giving slim returns because demand is weak (e.g. most needs are already satisfied, so there's not a strong incentive to buy more). That doesn't sound like the USA we know and love, and whose savings rate has been negative in very recent memory. But it might be a description of the world when evaluated on net. 

Don't look at me like I have data to support that argument, because I don't. But imagine how a world like the one I've described might behave. Because many, many people are choosing to postpone spending until a later date, there are many dollars available for investment. But they can't be profitably put to work building factories to make gadgets to sell to people, because people are saving instead of buying gadgets. So investment dollars are available cheap, chasing every opportunity to earn some kind of return. Consequently, interest rates fall (with or without Bernanke's say so). In such an environment risky investments that pay well look much more attractive than they usually do because investors are desperate. Investment schemes based on the promise of unproven new technology or the faulty hope of perennially rising home values almost make sense. Eventually this kind of bad investment gains a certain amount of respectability and even becomes an indispensable part of every portfolio, because no one wants to be left earning pennies on securities that give Treasury Bill-like returns while the stupid money (other banks, municipalities, and private investors) make relatively good returns and don't seem to be blowing up.

This story is so simple that it must be wrong. Please tell me how it's wrong.

But if we assume that it's right, what policy can fix it? Or should it be fixed?

What if the solution is for governments to tax and spend in order to forcibly lower the savings rate?

What if we believe that taxing and spending is the solution, but it turns out that taxing and spending in the US doesn't fix the problem because we don't save much anyway, and that the real savers are in China and India?

Thursday, August 12, 2010

Discouraging Effort and Success

Why do we tax labor? We know that any tax on an activity discourages people from engaging in that activity by reducing the rewards for doing it. So why do we tax hard work, production, and wise investment? Do we really want less of those things?

We need to fund our government (some claim), so we need to tax something. Why not tax behaviors that we want less of? Wouldn't that be killing two birds with one stone?

What would happen if we ditched all income taxes (including capital gains, and corporate income taxes) in favor of taxation levied exclusively against consumption? How would our society change?

I imagine a system wherein my income is not monitored by the government, but the total amount of my consumptive spending is instead. It's easy enough to do - just give up cash and require banks to report the amount of spending. As long as my consumptive spending total for the tax period stays below a legally established minimum, I pay no tax. But when my total rises above that level, I begin to pay tax out of each additional dollar spent. So if I don't spend much beyond the limit, the taxation I experience will be very low.

There are many advantages to such a system. For one, we'd stop punishing smart and hardworking people for being so productive. Every dollar they earn would be theirs to keep. This would include dollars earned for good investments (capital gains). Similarly, we'd stop punishing businesses for competence in producing and selling products and services to people who need them. When a highly successful business has to pay a large amount of income tax while its less successful competitor pays no tax (due to writing off business losses) the playing field is being unfairly tipped to reward poor performance! Not only that, but why tax production at all when production is what gives us the things we need and desire?

Also very important is the fact that taxing consumption, instead of labor, production, and investment, allows individuals to adjust their tax liability to fit their circumstances and desires. If I don't want to pay so much in taxes this year, I can reduce my consumption and pay less. And, I bear no penalty for working extra hard to earn additional money to fund my future, or my children's future.

Under this kind of system saving would be strongly incentivized. For those who wished to avoid taxation, saving and wise investment would be the safest harbor for their money. Everyone would be faced with compelling reasons to defer spending to a later date. Government subsidized retirement could become unnecessary for average Americans.

It's possible to take this idea to a more extreme level and suggest that leisure (time spent not producing or learning) could be taxed when it exceeded a certain minimum amount. This could spur the indolent and chronically unemployed (whether poor or wealthy) to return to productivity, lending their efforts to the improvement of society.

Undoubtedly there are many weaknesses in such a plan, and opportunities for clever gaming of the system. But that is no different from our current system for taxation.

Are there structural problems with this proposition?

Thursday, July 22, 2010

Quote of the Day - Me

'Human Dignity' seems like weak wording for the issue of who gets to summer in Provence and who gets to die of dysentery before reaching adulthood.

Look for me in the comments at http://factsandotherstubbornthings.blogspot.com/2010/07/on-inequality.html

Saturday, July 3, 2010

Quote of the Day - Popper

"Institutions are like fortresses. They must be well designed and manned."

Overly Simplistic

So, how would it change the nature of American government if every law came with a sunset clause, by default? In order to persist beyond, say, three years, they'd have to be re-adopted. I believe that the primary change would be to make governance more experimental and more fluid. Good thing? I don't know. I think most people are annoyed by the very slow pace of positive change in this country, but probably most are happy that the pace of negative change isn't any more rapid.

Would there be other significant unintended consequences? E.g. Regime uncertainty? Could those consequences be mitigated in some way?

Thursday, June 24, 2010


Many economists build a case against policies that are aimed at reducing inequality in income and wealth. Their argument rests on two premises:

  1. Societies should seek to be maximally productive, because this is the best way to provide for the needs of the members of the society, and
  2. There is a trade-off between equality and efficiency - policies that promote equality tend to reduce productivity.
I'm not convinced. 

The first premise invokes Coase: well-defined property rights ensure that any redistribution (of wealth, property, or rights) that will increase societal welfare will happen through the mechanism of the market without the need for the intervention of the government - provided that transaction costs are negligible. 

Transaction costs are rarely negligible, but even if we set that aside there is still a problem. Arnold Kling gives an example that illustrates the problem with Coase. Prof. Kling considers the case of a biker who needs to use a bike path that crosses private land. Here's my retelling: The biker is willing to pay a heavy toll (a large percentage of his total wealth) in order to be allowed to use the path, because he wants to reach the hospital where his father is dying to see his father one last time. If he doesn't use the path then he has to take a much longer route and will not reach the hospital in time. The landowner wants to exclude the biker from using the path because the landowner doesn't like to have strangers on his land. Let's assume essentially zero transaction costs - the biker carries a transponder that automatically computes and pays his toll (with his agreement), according to the rate the landowner has set. The landowner sets the toll at a level that compensates him for the unpleasantness he experiences at having strangers cross his land. 

The problem is that the biker is very poor, and the landowner is very wealthy, and as a result, the price the landowner sets is much higher than what the biker can pay, even though the biker places a very high value on using the path. Under Coase, as long as the biker gets more value out of using the path than the landowner loses when the biker uses the path, then they should be able to agree on a price that compensates the landowner. Why doesn't that work in this case? Clearly, the biker places a very high intrinsic value on using the path - equal to a large percentage of his total wealth!

It doesn't work because the landowner and the biker value money, dollars, differently. Essentially the biker and the landowner are not using a common unit of exchange. You could say that the landowner sets the price in apples, but that the biker is paying in oranges. Or to highlight the difference in value, the landowner is setting the price in coal, but the biker must in diamonds. 

There is a further, even more radical implication to all of this, and that is that when there are differences in wealth among the members of a society, transfers from the wealthy to the poor INCREASE net societal welfare. This is because when a dollar is taken from a wealthy man and given to a poor man, the loss of intrinsic value experienced by the rich man is less than the gain in intrinsic value experienced by the poor man. Prices don't clear the market because prices are not established in units of intrinsic value.

As far as premise number two, I haven't seen any good measures of the magnitude of that trade-off. Is it significant? Is it significant at some degrees of intervention, but not significant at others? If you know where i can see data that describe this relationship I would be very interested.

PostScript: None of this addresses the libertarian arguments against policies that are aimed at reducing inequality. Nor does it address the question of whether governments are needed to effect redistribution (when it is desirable), or whether non-coercive institutions and norms could be a more optimal solution than government.

Wednesday, June 16, 2010

The Point Of This Blog

"Without new technologies, an economy might grow slowly. But without decent rules, an economy cannot even make use of the technologies that already exist."

-Sebastian Mallaby

Friday, April 2, 2010

Of mind control, paranoia, and secret government...

...I can't even finish the title. Are you still reading this, or have I already driven you away?

Beginning in the 1950s, something strange began in the US. It involved experimentation with powerful chemical compounds that had the ability to alter behavior and brain function. Documentation shows it lasted through the 1960s and may continue to this day.

No, it's not the hippie era, but that's a good guess. I'm referring to MK-ULTRA, the covert CIA program that studied how people responded to LSD and other drugs, presumably to determine how the agency could make use of the chemicals in other secret CIA settings.

The implications are far-reaching, the fodder of conspiracy theorists and mind control authorities (nearly all of whom seem to have their own blog, book, and following).

It's a lot to weed through, but here's what is certain:

  • There really was a project named MK-ULTRA, and they really did do experimentation with dangerous drugs on unconsenting subjects.

To be honest, I was prepared to debunk the whole thing as ridiculous conjecture, but it isn't possible. Most of the documentation was destroyed in the 70s, but some it remains, and what it says doesn't bode well for the non-paranoid.

At least some of the research was applied to "unwitting subjects in normal life settings. It was noted earlier that the capabilities of MKULTRA substances to produce disabling or discrediting effects or to increase the effectiveness of interrogation of hostile subjects cannot be established solely through testing on volunteer populations." They freely admit that, regarding this controversial aspect, "No effective cover story appears to be available."

They weren't unaware of what might happen, but in paired sentences say that "possible sickness and attendant economic loss are inherent contingent effects of the testing" AND "that the program is not intended to harm test individuals." I guess hiding under the shelter of "intentions" is a fine justification.

At least one death is attributed to this program, that of Frank Olson, who was a specialist in biological warfare and had LSD slipped into his drink during a meeting with CIA personnel. Reading about that incident begins to sound like a Tom Clancy plot point, and the exact circumstances are difficult to find; so much of it is tangled up with speculation and wild leaps to bleak conclusions. That the CIA gave him LSD without his knowledge is documented. Under what circumstances he then fell from the 13th story window is not as clear.

Many people think that the program never ended. Its scope was certainly larger than the available papers describe.

In March 2010, the effects uncovered in this understated article give a better picture of the involuntary research. This is where I started to think that there are perhaps far more implications than I had considered.

What does it all mean? It's hard to add up all the facts, hard even to separate what we actually know from the ridiculous notions people are quick to invent.

On the other hand, knowing that something like this certainly existed, and that there is much we don't know, doesn't add to my confidence that government programs like this probably don't exist now, and that if they do they're tame little experiments that don't do anyone any harm.

It's nearly impossible to be a naive optimist anymore. But how much paranoia is appropriate?

Wednesday, March 31, 2010

Great links

I am completely endeared by this Lego street art. Using Lego for minor city repair work is brilliant. Here at Dispatchwork.

This is the scariest jewelry I have ever seen. There must be a better way to dispose of old Barbie dolls. (But, yes, baby limb coatrack is worse. Gah.)

More than you ever wanted to know about the giant sea creature that is leaving people startled and horrified.

Think you have a great gadget idea? Sorry, the Japanese already thought of it.

And, finally, why are we so grossed out by this and not the cheese we normally eat?

Monday, March 22, 2010

Roots of Government

Government is coercive. Concentrated application of force is what government is for.

I imagine two stories for how government arises. The first is government as the embodiment of the social contract, where the contract in question is not figurative or proverbial, but literal. According to this story, government is chartered through an agreement among parties to defer power to an enforcer. This is the process by which townships of the old west incorporated, and hired a mayor to attend to administer the activities of government and a sheriff to physically enforce law and order. The people of the town authorized the government explicitly, and explicitly agreed to be subject to the law and to the officers who carried it out. They further participated in government through town hall meetings and by bearing arms in the defense of the law as deputies.

This same kind of government can be found in clubs and private organizations, and in businesses. The fact that in this story government originates in an agreement among the parties to be governed should not obscure the fact that the government is adopted specifically for the purpose of exercising coercion over the governed. Consider the freelance labor crew who wishes to maximize their profit. They may choose to hire a foreman who is brutally forceful, in order to ensure that every member of the crew works hard and no one is allowed to free ride.

In the second story of the origin of government, government is imposed on local people from outside of their own community, and without their consent. This is the feudalistic story of government, where small farming villages are robbed repeatedly by regional bandits. Eventually the theft becomes routine, and competent leadership among the bandits leads to a sustainable level of pillaging that doesn't destroy the farmer's ability to continue producing each year. Full-fledged feudalism is justified as protection of the serf class by the bandits, who claim that the bandits of the next fiefdom over are far more brutal than they are. So, a social contract-like mantle legitimizes the theft and coercion.

In both of these stories, government exists for the purpose of exercising force.More particularly, it is for the purpose of imposing the will of a powerful coalition, who may be a majority or may simply be a sufficiently powerful elite, upon the rest of the society. The townsfolk impose law and morality upon the lawless and the eccentric, the crew of laborers impose hard work upon the lazy, and the bandits impose taxation upon the serfs. The difference is in what fraction of the population is represented by the government, and what fraction is victimized by it.


Map of Christianity

Rob and I both loved this map of Christianity across the US, linked by Wehr in the World (with great discussion) from Floating Sheep (with more maps).

And the corresponding map of Europe:

I noted how much less diversity there is in Europe. Rob responded with this line of thinking:
You know, what you said about the Europe map showing less diversity supports the argument that the availability of religious choice in the US is part of the reason that religion has remained vital and satisfying to Americans while it hasn't for Europeans.

And that makes me wonder about the dynamics of religion in other parts of the world...Japan (low diversity, low interest in religion)...the middle east (high diversity mixed with religious violence maybe promotes interest in religion and in group identity)...Africa (see the middle east)...

I don't know much about religion in other parts of the world. I guess S. America is mostly Catholic? Are the native religions alive at all? How long has China been relatively irreligious? Probably since before the cultural revolution I'll bet. Otherwise the cultural revolution probably wouldn't have been possible. How do Indian Hindus feel about their religion? I just don't know.
I love how this man thinks.

Wednesday, March 17, 2010

Map bliss

Yesterday I became interested in cartography. It's a natural extension of my love for geographic scribbles and fonts. As a result, I ended up with a rich list of links and maps.

Most of you are already frequent visitors to Strange Maps, and I wanted to share some of the other things I've found during my mapping splurge:

I love xkcd and just found this awesome map (click to enlarge):

VerySpatial, which, along with a few other sites, led me to this gem:

It must be seen in its original full size to be fully appreciated.

Cartastrophe. The name says it all. Fantastic.

The Map Room. It won my heart with this 8-bit map of New York
but there is so much more. Fascinating. I could sink hours into that site.

Geographic Travels is slightly different from the others listed here. More factual, less amusing, but also much more integrated with archaeology and history.

For finding good color schemes, I love kuler and ColorBrewer.

Some great forums over at CartoTalk and inspiration over at Making Maps.

Friday, March 12, 2010

How change happens

It happens slowly, but it has a definite momentum.

And it first appears unrelated, but I don't believe it is. Childbirth in the US is changing.

First, the news that the maternal mortality rate in the US is rising dramatically. Maternal mortality is defined by the World Health Organization as ‘‘the death of a woman while pregnant or within 42 days of termination of pregnancy, irrespective of the duration and the site of the pregnancy, from any cause related to or aggravated by the pregnancy or its management, but not from accidental or incidental causes.’’

The US currently ranks 33rd out of 33 industrialized nations. The rate, which is measured in deaths per 100,000 births, rose from 17 in 2000 to 21 in 2005, and is still climbing.

A report commissioned by Amnesty International shows that in California, the maternal mortality rate in California has tripled in a decade, rising from 5.6 deaths per 100,000 to 16.9 per 100,000 in 2006 (these statistics are always a few years behind, so if the trend has continued, we can expect that the current rate has not improved and may be higher).

Why? The reasons range from hemorrhage to blood clots to "underlying heart disease," which is a surprise. I'm not sure if that essentially means lack of proper prenatal care, a health insurance coverage issue, or too many stops at McDonalds during pregnancy. Not sure how to explain that one. The report has not been officially released, though, so perhaps it will clarify these oddities. Others have suspected that the maternal mortality rate is correlated with the increase in cesarean sections in the US. Our most recent estimates place the c-section rate in this country around 33-37%, depending on which source you use. About one in three women have a cesarean instead of a vaginal birth. By any measure, that's far too high.

And then the quite sudden news about VBACs (vaginal birth after cesarean), which had been officially decried by ACOG (American College of Ob-Gyns) as too risky for women who had an initial or a repeat cesarean, but VBACs are now being encouraged.

Many VBAC advocates have argued for years that vaginal births are safer for women than a repeat of the major abdominal surgery of a c-section, and all signs have shown that they were being ignored. Suddenly the NIH reviews the information and recommends VBACs.

I don't believe these two things are unrelated in their timing. Many women have been vying for change in childbirth in this country. So first we see evidence that our system hasn't been working as well as we had hoped, and immediately following that, we see adjustments being made with major implications for women everywhere (it follows that since more women are having/have had cesarean sections, more will be candidates for VBACs).

Change is (finally!) happening.

Monday, March 1, 2010

Balancing the bad news

There has been a deluge of bad news lately (for example, how those poor penguins from that terribly depressing movie can't get a break).

Honestly, I can't stand the news. I see very little purpose in it. The news paints the world as a scary, dangerous, heartless place. Sometimes it is, but when I start paying too much attention to the media's view, I become terrified and introverted. What does one gain by reading headlines, finding out what terrible things have happened in the world? It's all bad, in my mind.

And that's why I'm grateful for the internet. The best stuff out there is completely unrelated to the news.

Do you love Popcorn? Here's a link to 79 versions of it, all mixed together in a single 12-minute-long masterpiece.

This blog, Music Machinery, is a new discovery, and I'm enjoying it. He's got some great graphs and visualizations. My personal favorite is this one, which shows loudness as a function of time (to track the crescendo) for Muse's song 'Take a Bow':

I love good data visualizations. Which is why I can't stand this one (not created by the same person):

I can't even figure this out. At first I thought it was graphing music playlist classifications across Europe, but evidently the cloud isn't supposed to evoke a geographical image at all. It's just a...cloud.

Sunday, February 21, 2010

Rational Emotion

This is my response to Jenn's post Dismissing Emotion.

There are two kinds of mental process, conscious and subconscious. We can report the logic of the conscious mind, but we can't observe or give an accounting of the logic of the subconscious. However, many people learn the skill of explaining their subconscious processing after the fact, "rationalizing" the conclusions they came to subconsciously. Doing this completes a feedback loop in which the rules the subconscious uses in its processing can be updated. Basically, the conscious mind can be used to discard the false premises the subconscious may have been relying on.The movie Memento illustrates the inverse of how this is supposed to work. Instead of reliably updating old information with new, our hero deliberately deceives himself.

What is emotion? It is the motive impulse, the thing that drives us to act. It is the expression of mental processing, the result of our thinking, where thinking includes conscious and subconscious mental processes.

The conventional wisdom is that it is a mistake to act on impulse/emotion. However, this is something of a misdiagnosis. It isn't that emotion is unreliable, it's that in new situations our thinking is not well-developed and can be mistaken in its conclusions. The conventional wisdom is correct that it's best to pause and take stock and to seek to understand the situation in new light so as to avoid mistakes. But emotion versus reason is a false dichotomy. Emotion flows from reason.

Saturday, February 13, 2010

Turbine Cars

Capstone Turbine is planning limited production of a plug-in hybrid, the CMT-380 that uses a small turbine engine to extend range. The car looks great, as it should because it's a basically just a Factory Five GTM with batteries, an electric motor, and a turbine powered generator to keep the batteries topped up on long trips.

My guess is that the weight of the batteries hurts handling and acceleration somewhat.However, I'm still really excited by this car because I'm persuaded that putting turbines in cars is a good thing.

Turbines have several advantages over piston-engines:

  1. They are smaller and lighter-weight for a given horsepower.
  2. They are much more efficient - more of the energy of the fuel can be turned into usable power.
  3. They are much cleaner burning, producing less NOx because they can run a leaner (more oxygen rich) burn.
  4. They are naturally flex-fuel. Though turbines are usually optimized for one particular fuel they are generally much less fuel sensitive than piston-engines, making flex-fuel designs easy to implement.
  5. They are much more reliable than piston-engines.
For essentially these reasons, turbines are used to power some special purpose ground vehicles, like the M1 Abrams.

Here's another turbine diagram:

So if turbines are so great, why aren't they already being used in cars? They have two serious limitations that have made them impractical until now. The first is that turbines are not good at changing speed. They lose much of their efficiency advantage over piston engines if they are forced frequently change RPM. Also, they don't change speed very rapidly - after all they have a lot of rotating mass that doesn't want to slow down or speed up. The second limitation is that they are high cost.

The brilliant thing about using a turbine in a plug-in hybrid is that it solves the problem of changing RPM. The CMT-380 uses the turbine to spin a generator that charges the batteries when they get depleted. That way, the turbine can spin along at the one RPM where it is most efficient, regardless of how fast the car is moving.

The problem of cost can also be overcome but it depends on economies of scale, and possibly the regulatory environment. For example, tighter emissions requirements may give turbines an advantage over piston-engines. It's certainly the case that if turbines were widely adopted for automotive use that their price would come down somewhat.

Thursday, February 11, 2010

Business Cycle

Systems with feedback loops can have complicated, difficult to predict behavior. However, there are three basic varieties of simple feedback loop, and understanding these three types can lend insight into the behavior of more complicated loops.

The first type is positive reinforcing. These loops runaway in one direction forever, until something in the system changes and the dynamic is allowed to breakdown. The classic example is the runaway population growth of bacteria in a petri dish.

The second type is balancing. This kind of loop is characterized by equilibrium among opposing forces. It takes effort to push these systems away from their natural equilibrium point, and they tend to fall back again once the effort stops. However, they can be complicated by having multiple points of equilibrium.

The third type of feedback loop is oscillating. This is essentially a special version of the balancing type of feedback loop. As with the balancing type there is a force and an opposing force, but in this case the opposing force has a delayed response. As a result the system swings from one extreme to another, like a pendulum, as the system is dominated first by one force and then by the other. Aviators may refer to this behavior as PIO - Pilot Induced Oscillation. If there is a delay between when the pilot gives an input to the control surfaces and when the aircraft responds then the pilot will tend to give too much input and then over-correct, sending the plane into a potentially fatal oscillation. In a way, the PIO acronym puts too much blame on the pilot as this problem is really a result of the system dynamics.

I think the business cycle is the result of an oscillating feedback loop in the economy. Not much of an insight really, except that it implies that there is something structurally wrong with the economic system. Left to its own devices, the system will keep exhibiting this behavior.

The story I was taught in high school economics was that the Fed had been established to interrupt this oscillating behavior, by anticipating it and correcting for it. I was told that the Fed had been enormously successful in that role. I'm not sure that was true.

Can there be a market solution for bubbles and the Business Cycle?

Wednesday, February 10, 2010

"Community, Identity, Stability"

I am embarking on a beautiful journey.

I have committed to read at least 20 books related to dystopia before August 24th.

Dystopian (or post-apocalyptic, as they're often interchangeable) literature might be my favorite. I devoured and love and still talk about the books that introduced me to these dark and fascinating worlds.

1984. Brave New World. Fahrenheit 451. And, more recently, The Road.

I am delving into some lovely books, short-listed on my other blog here.

Four horsemen and an apocalypse
I am aware of several of you, beloved readers, who reject fiction outright as a waste of time and read nonfiction almost exclusively. Even still, I'll put it out there: if anyone has recommendations in this genre, I would love to hear them. The darker, the better, probably.

My favorite example is Wuthering Heights -- not dystopian, but certainly with darkness and misery to spare. I love that book because it seems to me a very real depiction of what might happen if two people who are in love and meant for one another are parted prematurely by death. What would the surviving person do? He would become a bitter and cruel man, spreading about the torment he feels to others until the day he dies, unhappily and unfulfilled. That makes sense to me. It's exaggerated, perhaps, but on the other hand, maybe not. (It's definitely more honest than that unspeakable series that geared up towards a final conflict only to end with a mild discussion between
parties, leaving all who were preparing for their inevitable deaths living (groan) happily ever after. A fantasy I cannot sink my teeth into.)

Anyone have something to add to my list? Or other related books to read?

Monday, February 8, 2010

Dismissing emotion

Falkenblog brings up the argument that emotions are an unnecessary distraction to being human. To his credit, he refutes the argument, but I have to say that I'm getting very frustrated with the condemnation of emotion.

I cringe when I hear adults say that it isn't acceptable to cry. Sometimes, though, there is nothing more appropriate than crying, and if you don't, if you lock that away, you've misunderstood what it means to be human.

We feel deeply, and, at the risk of getting too flowery in my language, it is a magical part of living. When we are children, we felt things acutely, painfully, both joy and disappointment, gratification and longing. Everything was magnified. Who is happier than a child, when the child is content?

Falkenblog says, "little kids cry a lot, adults almost never (curiously, I currently am only tempted to tear up during movies)." At first I was angry. Why don't we cry more, as adults? What stops us?

And then I considered the role of media in bringing up emotions in us.

Robert and I have spent the past few weeks reading a book together aloud. It was a work of fiction. At a certain plot point, during which one of the characters met a sudden demise (and, in a sense, so did the plot, in my estimation), I felt a surge of feeling. I hadn't known how attached I'd grown to that character until that moment. And I loved that a mere work of fiction could cause me to feel something so strongly. For that reason alone I don't regret reading that book, though it was harrowing and ultimately disappointing.

I use fiction, music, and film to some extent as a safe arena for experiencing and dealing with powerful emotions. Part of me, I think, fears that bringing out the pure emotion I felt as a child and which is now tempered by adulthood will make me less functional. A little emotion, seeping through, helps with decision-making, as Falkenblog points out. A lot of it would probably cripple me, as much as a three-year-old throwing a monstrous fit, or distracted by utter fascination at a grasshopper.

But really, the reason for embracing emotion is because it makes living so rich. When we grow up and lose touch, we lose too much.

(Forgive my lack of organization with this, but it seemed fitting to leave a post addressing emotion a little bit irrational.)

Sunday, February 7, 2010

Got To Save My Nickels and Dimes

There are way too many courses on here that look fascinating... I fantasize about my daughters using content like this for entertainment instead of Barbie and other pop culture.


Egypt / Lebanon Montage from Khalid Mohtaseb on Vimeo.

Friday, February 5, 2010

Social Welfare

I’m puzzled about something, maybe you can help me out.

Economists sometimes talk about a concept that I am going to refer to as the level of social welfare. Basically this is how much utility, or satisfaction, the society is enjoying as a whole. Here’s a simple example: imagine a society that consists of just two people, Bob and Frank. Bob has a banana that he would like to sell to Frank. Bob is willing to sell the banana for any amount greater than $1. Frank is willing to buy the banana for any amount less than $2. Bob is a good negotiator, so they eventually agree on a price of $1.75.

In this example, the sale of the banana increases the wealth of both parties. Bob traded something he valued at $1 for $1.75, so he gained $.75 worth of value.  Frank gave $1.75 for something that he valued at $2.00, so he gained $.25 worth of value. The level of social welfare in Frank and Bob’s society has increased by $1.00, because of the sale of the banana.

So the level of social welfare, as measured by economists, has to do with how much value people place on different items, and on how those items are distributed through the society. Moving goods and services from people who value them less to people who value them more will increase the total level of social welfare in the society. This is basic microeconomics.

The thing that bothers me is this: How much a person is said to value any particular good or service is measured in dollars. That is a relative measure, because it’s really comparing how much the person values the good or service against how much she values dollars.

And how much she values dollars depends on how many dollars she has.

Is this an objective way to measure the level of social welfare in a society? If I am very poor then this measure of social welfare under represents my preferences, needs, desires. Here’s a simple example: two starving men approach a baker who has one loaf of bread left to sell. The baker, having studied microeconomics, knows that the man who values the bread the most will be willing to pay the highest price. One of the starving men has $2 in his pocket, the other has $5. The baker sells the loaf for $5, confident that the man who offered only $2 wasn’t as hungry as the man who offered $5.

Obviously, the prices that the two men are willing to pay do not adequately reflect the value they would receive from the bread.  This is a serious problem. It undermines the legitimacy of calculations of social welfare. It also undermines the legitimacy of the price mechanism as a welfare maximizing means of distributing goods and services.

Is there a legitimate, objective way to separate preferences or utility from ability to pay? Is there some way to put the preferences of the poor on equal footing with the preferences of the wealthy, at least for academic purposes? 

Tuesday, February 2, 2010

New Yorker on China and Innovation

My brother recently sent me an email responding to this article in the New Yorker. Here are a couple of his points.

"...government infusion of cash doesn't necessarily equate to technological breakthroughs or economical success in industry. In fact, when the government gets involved, ...money follows "success," and success can only be measured by preconceived norms. A company may be successful at coming up with a better version of a preexisting technology, because norms have been standardized with which to compare progress. But new ideas and innovations can have a harder time succeeding in an environment where business is competing for government dollars when the outcome is unclear or the technology is previously unknown. "Add as many mail coaches as you please, you will never get a railroad" is a great metaphor for the risk-averse Chinese philosophy pointed out in the article."

"Through taxation (and therefore, at some level, economic deprivation) and questionable living conditions (and therefore, at some level, quality of life deprivation), the Chinese citizens bear the brunt of the cash infused in the tech sector, and the gains made thereby. This is a radically different approach when compared to venture capitalism: in the latter, the contributors have the choice to participate.

"And that is basically what to me is at the heart of this article: the assumption that redistribution of wealth (in this case, to advance technologies) is for the greater good, when compared with the freedom to choose to participate, or to refrain from participation, according to the dictates of one's own conscience, of free market capitalism. I argue that the majority of technologies, advances, one could say "creature comforts" (I despise the term) that we enjoy today are the result of the latter."

I want to add that:

1) Government investment displaces private investment. This is for two reasons, the first being that private investors don't like to compete with institutional investors (this is the 'picking winners' problem - I don't want to invest in a company whose competitor is being financed and protected by the government), and the second being that the government dollars had to come from somewhere - specifically they came out of what would have been private spending and investment.

2) Though the author pretends to address the 'picking winners' problem, he actually doesn't. No matter how you slice it, government bureaucrats divvying out dollars is significantly different from the marketplace divvying out dollars. For one thing, the government is more likely to keep throwing good money after bad when an investment has failed to pay off (because the government doesn't risk insolvency by doing so, and because it's difficult to change a policy once it's been accepted and implemented). The market is quick to reallocate investment when it's clear that a risk has gone bad. Another difference is that the market will naturally fund MANY competing ventures, and the best ones will win. The government tends to choose a handful of firms to back, and then tries to ensure that the investment will pay off by using regulation to make sure THOSE firms win. So the survival of the fittest dynamic is lost. Finally, the market crowd sources problems by aggregating the intelligence gathering of MANY individuals, while the government must rely on relatively few experts to try to make decisions. 

Job description

I am a doula. My job is to take care of the emotional aspect of women while they labor and give birth, making sure that they feel safe and attended to and have their nonmedical needs met. Generally speaking, there are too few nurses in the hospital to guarantee personal attention to all childbearing women, and that -- having someone attend to them personally -- is why most women hire me, far more than wanting to get through childbirth without an epidural.

I am knee deep in my first Statistics class. Our first project was to conduct an informal survey on a topic of our choice, mostly to learn about bias and data analysis. I chose childbirth, since that is my field, and asked questions regarding how well-supported women felt during the birth of their first child, whether they had a doula present, and generally how they felt about the experience.

Nearly every person I surveyed responded with some variation of the same criticism: the medical staff was not kind enough, did not pay enough attention to the mother's emotional welfare, either by saying something inconsiderate or inappropriate or overlooking something that would have been nice (in one case, a nurse forgot to bring a sandwich to the mom, and she described it as the worst part of her unmedicated experience!).

It is understood, or at least should be, that when we enter a medical environment such as a hospital, our emotional health takes a backseat to our physical health. What matters the most is that we are alive and healthy, and secondarily (or even sometimes less) how we feel. Doctors and nurses are not required to be nice people or to get along swimmingly with their patients.

And yet we feel a great amount of betrayal when we are treated with less than sterling service. As if hospitals were akin to upscale shoe departments.

Now, I'm not saying that we should expect to be treated rudely. I wish it never happened, but it does, in every environment.

What I am wondering, though, is why so many feel free to hold nurses and doctors to this standard, and whether that means that it SHOULD be included in the service we receive when we seek medical care. No nurses have in their job description to treat their patients with impeccable emotional attention. But I think many of us expect it, get hurt or angry when we don't receive it, and still feel that it was their job to provide it, even though it isn't.

It seems apparent that emotional wellbeing is wrapped up with physical wellness, whether we rationalize it away or not. My question is, well, should it be included in the definition of health care? Should psychological care be a recognized aspect of medical care in every practice? Are we losing anything by continuing to go forward with this hit-but-mostly-miss way of treating patients, or is this a crucial element of health care that needs to be addressed differently?

Saturday, January 30, 2010

Calculating Probabilities

When it comes to religion I tend to use the  'three kinds of people" model. Roughly speaking, you're either a theist, an atheist, or an agnostic. Which of these three is the most defensible position? Which makes the most sense? Which is most consistent with science? What criteria should be used to evaluate your argument for your position on the question of whether there is a god?

I'm not sure that I know the best arguments for each of these three positions, but here's my best shot at evaluating them.

Theists have a problem when it comes to science. They're probably just never going to have anything like scientific evidence for their position. Depending on the particular brand of theism, it may be logically impossible for them to have evidence. For example, one form of theism says that god, being omnipotent and omniscient, can manipulate the universe such that his presence is simply not detectable by scientific means. If you're that kind of theist then it's no surprise to you that science isn't finding god. You're problem, then, is an epistemological one: how do you know that there is a god? Do you have some method for creating knowledge that is different from science? Or do you just choose to believe, even though you don't actually know?

Atheists also have a problem when it comes to science, and for exactly the same reason. The proposition that there is a god who can hide the evidence of his own existence is completely unscientific. It cannot be addressed by science. Atheists will tell you that the claim that there is a god is similar to the claim (without evidence) that there is a teapot in orbit. However, these claims are not similar. The god-claim is an attempted explanation of observed phenomena: there is a universe, there is life, there are sentient beings. The god-claim says these things are here because god made them. The teapot claim has no connection to observed phenomena. Atheists say that we can dismiss the teapot-claim because the probability that it is there is vanishingly small. Without evidence of the teapot, or a reason why it should be in orbit, this is absolutely correct. But we can't make the same argument against the existence of god because, 1) if the god-claim is true then we should expect to find no evidence of god (a weak point, but not able to be defeated), and 2) the god-claim explains things that are currently unexplained, or inadequately explained. Ultimately, the problem with the atheist position is also an epistemological one: how do you know there isn't a god?

Agnostics take the easy way out. They admit that there is no scientific evidence for the existence of a god, but also admit that this doesn't mean that there actually isn't a god. As a result, agnosticism embraces a wide spectrum of people from near-believers to near-disbelievers.

So, a question for those of you who are theists: Do you admit that there is no scientific evidence for the existence of a god? And if so, what method for creating knowledge have you used to discover that god exists?

A question for atheists: If you reject the proposition that there is a god, not because you can prove there is no god, but because you believe that it is highly improbable that there is a god, then how do you compute the probability that there is a god?

Agnostics get a pass.


Wednesday, January 27, 2010

There must be a shortage of editors

But it's a good thing, if you're easily entertained.

The perfect visual for your topic

I received this little gem in a newsletter:

I don't know how they found it, but they managed to procure just the right picture. 

The best poorly-worded headline today

Judge asked to halt planting of genetically modified sugarbeet seeds in Oregon

If you insert a few commas, you get:

Judge, asked to halt planting of genetically modified sugarbeet, seeds in Oregon

which makes a lot more sense.  (Doesn't make it any more newsworthy, though.)

These never get old

I believe this is Korean. I also believe that translators in foreign countries must let these through intentionally without correcting them so that we can enjoy them.  After all, the spelling and punctuation are perfect.

On a different note, Robert may not allow me access to his blog if I keep this up.  More serious posts are forthcoming.  I hope you enjoyed these for now.

Tuesday, January 26, 2010

When Data Visualization Goes Wrong

It's Jennifer again, and I'm happy to see a combination of two of my favorite things: creative visualizations, and fonts.

I love fonts.  I am a font geek.

So I was very pleased to see a chart illustrating how much ink common fonts use relative to one another, here

...That is, until I reached the end of the short article, beneath the pen graph: "Simple, understandable & clever."

Um, not exactly.

The chart uses clear plastic pens displaying varying levels of ink as a bar graph.  Cute, yes. Clever, definitely.  But not simple and not completely understandable.  Unfortunately, the data visualization choice could at a glance be read as saying the exact opposite of what it intends.  I loved it until I saw the problem.  If you're going to go through the trouble of gathering and presenting information, shouldn't you try hard to make sure that misinterpretation of this sort is not likely to happen?

Do you see it?  Do you agree with me?

Monday, January 25, 2010

It's a great day for links!

This is Robert's wife, Jennifer, standing in for Robert today.  He is very busy lately and doesn't want his poor blog to be neglected any longer.  And though I'm finding his shoes far too large and eloquent, I shall attempt it regardless.  So, begging your oversight for not being quite up to the usual standard, here is a small but worthwhile collection of links for your perusal:

Here's a great article over at Falkenblog with some interesting advice.

And some lovely and laughable pictures, respectively, at BLDG BLOG (naturally) and my favorite at Strange Maps.


Wednesday, January 20, 2010

The Next Big Coordination Problem

The costs of coordination are falling, rapidly. Our old models for how to organize and leverage the efforts of multiple people across disciplines are being outmoded.

The bureaucratic model has been universally adopted as the standard form for business organization because it has been highly successful. It's a model that has been under development for literally thousands of years. The bureaucratic model emphasizes command and control, and explicitly defines the rewards (payment) for participation. Within a bureaucracy each person has a specific role, and specific pay. The primary benefit of the bureaucratic model is that it manages the (traditionally high) costs of coordination involved in getting hundreds of people to work together on the same problem.

The wiki model, including the open source movement and crowdsourcing, seeks to revolutionize how people organize. The wiki model uses technology to lower the costs of coordination, making it practical to capture value from contributors who don't wish to join a bureaucracy, but do wish to contribute on their own terms. The wiki model lets contributors take on any role they wish. And, the wiki is efficient at capturing value in extremely small increments, one contribution at a time, as opposed to the bureaucratic model which requires the establishment of a formalized, contractual relationship before value can be captured.

A hallmark of the wiki model is a blurring of the distinction between professional and amateur contributors. For example, nearly all Wikipedia contributors are amateurs while Google utilizes both a large professional bureaucracy  and the efforts of users to index the web. Unlike the bureaucratic model, in the wiki world people often contribute their effort for free.

This is a problem.

It's a problem because it means that there will not be enough contribution. Technology and the development of the wiki model have lowered the costs of coordination, but those costs still are far from zero. The most important costs of coordination have always been, and still are, the costs associated with transacting for value. The genius of the wiki model is that it captures the value of amateur (unpaid) contributions. But, it's not going to replace the bureaucratic model until it can also capture professional contribution, and this means getting payment to flow from users to contributors.

The revolution is not going to arrive until professional contribution can be bought and sold at the margin. The death knell of the bureaucratic model will be the development of a system that makes it easy to purchase discrete units of professional contribution, instead of having to hire professionals.

Thursday, January 14, 2010

Walking Through Walls

The following is an excerpt from an essay by Eyal Weizman on the unusual tactics used by the Israeli Defense Force during their 2002 invasion of Nablus (quote from Brig. General Aviv Kokhavi). Hat tip to the excellent BLDBLOG.

"This space that you look at, this room that you look at, is nothing but your interpretation of it. Now, you can stretch the boundaries of your interpretation, but not in an unlimited fashion, after all, it must be bound by physics, as it contains buildings and alleys. The question is, how do you interpret the alley? Do you interpret the alley as a place, like every architect and every town planner does, as a place to walk through, or do you interpret the alley as a place forbidden to walk through? This depends only on interpretation. We interpreted the alley as a place forbidden to walk through, and the door as a place forbidden to pass through, and the window as a place forbidden to look through, because a weapon awaits us in the alley, and a booby trap awaits us behind the doors. This is because the enemy interprets space in a traditional, classical manner, and I do not want to obey this interpretation and fall into his traps. Not only do I not want to fall into his traps, I want to surprise him! This is the essence of war. I need to win. I need to emerge from an unexpected place. And this is what we tried to do.

This is why we opted for the methodology of moving through walls. . . . Like a worm that eats its way forward, emerging at points and then disappearing. We were thus moving from the interior of homes to their exterior in a surprising manner and in places we were not expected, arriving from behind and hitting the enemy that awaited us behind a corner. . . . Because it was the first time that this methodology was tested [at such a scale], during the operation itself we were learning how to adjust ourselves to the relevant urban space, and similarly, how to adjust the relevant urban space to our needs. . . . We took this microtactical practice [of moving through walls] and turned it into a method, and thanks to this method, we were able to interpret the whole space differently! . . ."

Wednesday, January 13, 2010

Trade Deficit Bad?

As always, please explain to me where I’m getting it wrong.

The common argument, repeatedly endlessly by reporters and politicians, is that if we import more than we export then that’s bad. It’s bad for American workers because they’re going to lose their jobs if we don’t buy what they make. It’s bad for our long term prosperity because we’re sending all of our money to foreign countries. And it’s bad because it means we’re losing! We’re being outcompeted by our economic and military rivals, e.g. China.

It’s a pretty compelling argument, on the face of it. But there’s something confusing about the whole thing, something that doesn’t quite add up.

When I buy a shiny new Japanese-built car my dollars go to the manufacturer in Japan, and I get the car. But the manufacturer can’t use my dollars to buy things in Japan; the law says you can only use yen to buy things in Japan. So the manufacturer who built my new car has to either spend those dollars in the US, or trade them to someone else who wants to spend them in the US. Those dollars are claims against goods and services in the US – they have to come back to the US in order to be spent.

So every time I spend a dollar buying some imported good, that dollar goes to the foreign company that sold me their product. But eventually that same dollar comes back to the US to be spent on something here. It HAS to, there’s no other place for it to go. So how can we even have a trade deficit? Every dollar spent by Americans on imports eventually comes back as spending on domestic goods, services … or investment.

Investment is the thing that balances the trade deficit. Investment doesn’t show up in imports and exports (when I buy stock in a business, the business stays where it is), so it isn’t counted when computing the trade deficit. So, the reason that America has had a trade deficit with the rest of the world for decades is because Americans have been buying imports while the rest of the world has been buying ownership in America.

What does it mean that the rest of the world is buying ownership in America? Primarily it means two things: 1) Foreign investment in American companies, and 2) Foreign investment in US Federal debt. The rest of the world wants to invest in America because America is a good bet. American companies are enormously productive, and the American government doesn’t default on its loans.

Is it a bad thing that foreigners have been buying ownership in American business? No! American businesses use that investment to innovate and grow. Is it a bad thing that foreigners own US Federal debt? No! The US Treasury sells bonds according to policies that it believes are in the best interests of the US financial system and economy.

The primary effects of the trade deficit have been that Americans have enjoyed low prices for goods and services of all kinds, and have benefited from high levels of direct foreign investment. The real risk is that one day the trade deficit will go away as investment shifts from the increasingly regulation-bound US, to freer markets.

Tuesday, January 12, 2010

Creeping Anarchy

I think it was my good friend Justin who recently pointed out to me that one Anarchist viewpoint is that societies are largely self-organizing -- and government is a sham. There's something interesting in this argument, though I am not yet ready to accept it in total. It's an empirical statement, and as such it's either right or wrong.

I DO think that our would be overlords are generally helpless to impose unpopular policies, thanks to our democratic institutions. And no matter how you poll it, healthcare reform is hugely unpopular.This recent AP News blurb documents the likely shedding of still more features from the planned healthcare legislation package. Correct me if I'm wrong, but doesn't that mean there is no meaningful healthcare reform left in either of the bills? Sure there's that thing about how the states should maybe do something about the lack of competition in the market for health insurance, but that doesn't count, especially compared against what was planned but has since gone missing: the public option, a requirement that large companies provide health insurance, regulation of insurance, elimination of the tax break on employer provided plans, meaningful provision of aid for the poor, any means for containing costs, and funding.

I think this all has to do with the fact that,

"...rules are hard to change (because they) reflect the values that are embedded in a culture."

Sound wisdom.